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Russian Housing Issues

Moscow Carine Clement directs a small NGO with five staff called the Institute for Collective Action in Moscow that supports nascent movements building around housing and other issues throughout Russia. It was hard not to continually think about the fact that she was a French woman who had come to the country a dozen years before, spoke fluent Russian, and more than passable English and her primary support was less the NGO than her position as a sociological research.

Especially for community organizers who were part of the Organizers’ Forum (www.organizersforum.org) delegation, having her start to unravel the issues around housing was fascinating. It was also difficult because there were a lot of issues involved. Essentially, all housing was public housing until the demise of the Soviet Union and therefore state owned. In the 1990’s if you were lucky enough to be able to hold on to your flat you were paying “communal” costs that were fixed for maintenance and public utilities, but maintenance in the collapse of the state was little and inadequate so housing stock was for the most part deteriorating rapidly without new construction.

In the development of the “market” economy there are now efforts by tenants to buy their flat and huge numbers of issues around how to do so. In some cases tenants are coming up with the money to invest in new construction of buildings, but as Carine reported they have frequently been swindled in the unregulated and speculative market there. Additionally, the government is signaling that by 2010 they are going to move away from price controls on the “communal” costs for water, lights, and gas, and everyone is in a panic about what this might mean and how it might be afforded on fixed incomes and the relatively low wages in Russia. There is organizing around all of these issues it appears in Moscow now as well as in some of the regional government centers. Oh, and one more piece in the puzzle in that a housing court is being developed to bring some order to the market here and a place that can receive complaints and decide on remedies, but seemingly no one understand how it might work and whether or not it will be legitimate. What a mess!

Rose Gottemoeller, the director of the Carnegie Moscow Center, who gave us an interesting briefing on the general political climate in Russia, provided another impact on all of this scurrying around the removal of state ownership from some of the housing stock. She believed that the desire for housing and therefore the attendant need some families felt for mortgages was providing huge leverage from banks and other financial institutions to force more of a family’s income to go “white,” as she called it. Until recently, much of someone’s wage might be hidden. The know wage was the “white” market income, but a worker might also get something extra as a bonus or for special services on the “gray” market. If the same worker, professional or otherwise, could sell those skills elsewhere outside of their primary job, then they had additional income on the “black” market. The need to satisfy lenders was forcing more of the money to turn “white” so it could be counted. She also argued that one of the few things she thought was an important contribution of the Putin Administration in its first term was the implementation of a “flat” tax of 14% that rationalized the chaos of the tax system before him and stabilized government. Moving incomes “white” also helped the flat tax work obviously.

Everyone we met seemed to talk about a society “in transition” and the countervailing tensions in the housing market seemed a good illustration that it was certainly neither easy nor was it painless to break apart everything about public and state ownership and control, and then reassemble it easily after Humpty Dumpty had fallen off the Kremlin Wall.